Microsoft Eyeing AOL Partnership

From Bloomburg: Shares of Time Warner Inc., the world’s largest media company, rose as much as 2.4 percent after the New York Post said the company is in talks to sell a stake in America Online to Microsoft Corp. Microsoft, the world’s biggest software company, would pay New York-based Time Warner an unspecified amount of cash for a stake in AOL and combine it with its Internet unit, MSN, the newspaper said, citing two unidentified people familiar with the situation.

Currently Google powers AOL search and provides AdWords ads to AOL.com. Google’s stock is only down a few points on a day with their secondary public offering and this story spreading. I can’t explain why the stock is not dropping further. MSFT might be spending some of their 37 billion to buy the pieces they need to be a search contender. LookSmart’s stock has been inching upward all month long as well.

With Ask developing their own in house ad sales network and MSN potentially gobbling up AOL it looks like Google may end up losing a huge amount of their ad syndication. Lucky for Google they have built Google.com into such a large destination site. In The Search John Battelle mentioned the biggest problem with the Overture business model was their heavy reliance upon partners.

One thing MSN has to look out for is their own walled garden approach, which was a large part of what was the original demise of AOL.

The original New York Post article [sub req] also states: Talks are most advanced with Microsoft — Time Warner management’s preferred partner — but the media giant has also had discussions with both Yahoo! and Google over a sale or venture with AOL, according to a source close to Time Warner. Interesting times ahead.

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Aaron Wall is a Search Engine Marketing expert and the author of the SEOBook.